A retirement village is a community-style residential development offering accommodation, facilities and services to people from retirement age onwards.
There are many types of arrangements which should be carefully explored before making your move to retirement-village living.
You will need to ensure that the village you choose meets your specific needs and that you understand your legal rights and responsibilities under the retirement village contract.
Following is a brief overview of the different legal arrangements for retirement village living and our top five tips when considering your move.
Retirement village arrangements
Buying into a retirement village does not necessarily result in outright ownership of the property. Whilst many strata or community developments facilitate this, most retirement village arrangements are either loan-licence or leasing arrangements.
In a loan-licence arrangement the resident pays an up-front contribution (interest-free loan) to the retirement village operator. Ongoing contributions follow and the resident occupies, but does not own the premises.
When leaving, the resident may need to pay an exit fee and may or may not share in any capital growth from the property.
A leasehold arrangement requires the resident to pay regular fees set at a market rate. The payment of other contributions and outgoings will vary between villages depending on the level of accommodation and services provided. Again, the resident may be required to pay a departure fee when leaving.
Following are our top five tips when considering your retirement village move.
What do you want to achieve?
When planning your move, consider your goals and objectives in light of your personal circumstances such as your age, health, family arrangements (who and how close they are) and your personality (whether you are social or prefer solitude).
If you are recently retired, independent and in good health, you might be looking towards accommodation that is spacious, includes a garden, and is set in a village offering various facilities and activities. If you are more sedate, you won’t want to be paying for the upkeep of golf courses, tennis courts and a swimming pool if these activities do not interest you.
Consider also whether the care services offered will be sufficient to support you for the years to come. Although you cannot predict the future, it is sensible to assume that you will require more care and assistance as we age. The availability of health and nursing services, meal preparation and assistance with cleaning and other domestic duties are important factors.
Remember, entry into a retirement village does not result in an automatic subsequent entitlement to aged care services. This assessment is made at the Commonwealth level.
Once you have a clear idea of what you are trying to achieve, consider the retirement village’s location, the proximity of entertainment, shopping and health services, the quality of buildings, care services and available facilities. Obviously, the more lavish the village and extensive facilities offered, the more you will pay.
What will ‘village life’ be like?
Your day-to-day retirement living will be influenced by the managing body and rules setting out the rights and obligations of residents.
The rules include matters concerning the keeping of pets, whether friends and family can stay over, car parking arrangements, maintenance of buildings, common areas and gardens, whether social activities are arranged and use of recreational facilities such as libraries, communal dining areas, etc.
Some retirement villages are operated by private enterprises whilst some are run by the community, churches or charitable organisations. This may impact upon the daily ‘vibe’ of the village and the types of activities arranged.
Accommodation and services and the associated village rules can vary significantly between villages – it is important to get the right fit for your lifestyle.
Understand your legal rights and obligations
It is important to understand the type of arrangement you are entering, whether it be an outright purchase, loan-licence or leasehold arrangement. The legal relationship between the resident and village operator and contractual provisions from village to village can vary significantly.
Always have your documents reviewed and explained by an experienced lawyer. It may be helpful to take a family member or friend with you when meeting your lawyer to discuss issues raised during the meeting, and help to recall matters afterwards for follow up.
Village operators and agents should be transparent when giving information and provide detailed disclosure regarding the fees, amenities and services. Contracts should set out the terms and conditions pertaining to the resident’s right to occupy the premises, the permitted use of common facilities and types of services available which may include assisted living or aged care.
Consider the financial implications
Fees and charges comprise waiting list fees, holding deposits, ingoing contribution fees (purchase fee) and ongoing payments and service fees. Potential residents should ask whether maintenance costs are covered in regular payments or if these are additional and check under what circumstances deposits are refundable.
Often under-estimated when entering the contract, is when and how exit or departure fees are calculated when leaving the village – in some instances residents may be shocked to learn that they receive significantly less than anticipated. Exit provisions should be set out clearly – if in doubt ask for an explanation and example.
Meeting with your financial advisor is recommended if you need to plan or restructure your financial affairs. You will need to ensure your obligations can be met and determine the most effective financial strategy for your circumstances.
Regulation and reputation
Retirement villages are regulated by legislation in each state and territory. The governing laws require retirement villages to be registered or accredited with a specific government department charged with administering these rules. Village registration and accreditation can be verified with these organisations.
Village operators must give adequate disclosure and information regarding the retirement village before a person signs a contract. Proposed residents can request information about the services offered and details regarding financial arrangements and fees, budgets, sample contracts, site layout and plans.
Potential residents should enquire about the retirement village’s reputation and ask questions about how it is managed. Speaking to other residents is a good starting point.
Retirement village legislation provides important protection for people considering retirement village living – being aware of your rights and seeking good advice will help you to make a careful and well-informed choice.
Retirement villages provide an opportunity for older residents to live in maintenance-free accommodation in a secure community with access to services and facilities. Villages vary in style, quality, availability of services, legal arrangements and cost.
Potential residents should shop around, gather as much information as possible and not be pressured into signing a contract.
If you or someone you know wants more information or needs help or advice, please contact us on 02 9790 7000 or email [email protected].